In cryptocurrency trading (such as Bitcoin, Ethereum), "trading volume" (simply put, how much of a coin is bought and sold within a certain period) is actually quite useful. It helps us judge market trends and avoid pitfalls.

First, let's understand the basics of trading volume: it's not just a number. It can reveal whether the market is active, whether traders are buying into the trend (confirming price movements), and whether buying and selling can proceed smoothly (liquidity). It also reflects market sentiment—sudden spikes in volume might indicate panic selling or frantic buying. Different coins have vastly different trading volumes; for example, Bitcoin's volume exceeds the combined volume of other major coins. Some coins may have high market cap but very low trading volume, so caution is advised when trading them. Additionally, trading volume is categorized into spot and derivatives (like futures), and data must be cleaned before analysis.

Next is the core "volume-price relationship": when prices rise, trading volume usually increases, indicating a reliable upward trend with many buyers. If prices go up but volume doesn't, it could be a top (divergence). Conversely, when prices fall and volume increases, it suggests many sellers and a continuing downtrend; if prices fall but volume decreases, it might be nearing a bottom (divergence). Also, when prices break through key levels, volume should increase to confirm the breakout; otherwise, it might be a false move.

Now, let's discuss practical uses of trading volume: First, trend analysis—rising prices with increasing volume indicate strong momentum; sideways movement with shrinking volume suggests market hesitation. Second, confirming breakouts—if a coin breaks a critical price level with much higher volume than usual, it's more likely to be a genuine move up or down; otherwise, it might quickly reverse. Third, identifying tops and bottoms—after a long rally, a sudden surge in volume could signal a top; similarly, after a prolonged decline, a volume spike might indicate a bottom.

Advanced tools include the OBV indicator, which combines price movements with volume to better understand whether funds are flowing in or out. There's also VWAP (Volume Weighted Average Price), useful for both institutions and retail traders to determine optimal buy or sell points. Additionally, combining blockchain data (like large transfers or exchange inflows and outflows) can help verify whether volume data is genuine, avoiding fake signals.

Finally, how to avoid pitfalls related to trading volume: some platforms may fake volume (e.g., self-trading to inflate numbers). We can compare data across different platforms or check actual blockchain transfer records to identify false data. Market interference, such as different trading activity across time zones or arbitrage activities causing sudden volume spikes, should also be distinguished from genuine demand. Moreover, during extreme market conditions (like sharp price surges or drops), volume data may be unreliable. In such cases, using other indicators or pausing trading to manage risk is advisable.